About the liquidity ratio

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Reference no: EM13885472

Liquidity Ratio

Josh Smith has compiled some of his personal financial data in order to determine his liquidity position. The data are as follows.

Account Amount

Cash $3,200

Marketable securities 1,000

Checking account 800

Credit card payables 1,200

Short-term notes payable 900

a. Calculate Josh’s liquidity ratio.

b. Several of Josh’s friends have told him that they have liquidity ratios of about 1.8. How would you analyze Josh’s liquidity relative to his friends?

Reference no: EM13885472

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